Pooling and redistribution with moral hazard

Goulão, Catarina and Panaccione, Luca (2015) Pooling and redistribution with moral hazard. Economics Bulletin, 35 (1).

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Official URL: http://tse-fr.eu/pub/27986


In this paper, we extend the framework of Dubey and Geanakoplos (2002) to the case 6 of moral hazard. Risk-averse consumers, who can in uence the likelihood of states of 7 nature by undertaking a hidden action, receive insurance by voluntarily participating 8 in a pool of promises of deliveries of future uncertain endowments. In exchange, they 9 gain the right to receive a share of the total return of the pool, in proportion to their 10 promises. We first analyze the equilibrium properties of the model and then illustrate 11 how an aggregate pool of promises of heterogenous consumers, differing in expected 12 endowment, results in a welfare improvement over the two segregated pools.

Item Type: Article
Language: English
Date: 2015
Refereed: Yes
Uncontrolled Keywords: moral hazard, pool of promises, heterogeneous consumers
JEL codes: D3 - Distribution
D8 - Information, Knowledge, and Uncertainty
G2 - Financial Institutions and Services
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 16 Mar 2015 14:45
Last Modified: 07 Mar 2018 13:23
OAI ID: oai:tse-fr.eu:27986
URI: http://publications.ut-capitole.fr/id/eprint/16508

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